Lorber v. Jonathan Winston, Sheldon M. Ganz, Sheldon M. Ganz, Cpa, P.C.
| Decision Date | 03 July 2013 |
| Docket Number | No. 12–CV–3571 (ADS)(ETB).,12–CV–3571 (ADS)(ETB). |
| Citation | 962 F.Supp.2d 419 |
| Parties | Annette LORBER, Plaintiff, v. Jonathan WINSTON, Sheldon M. Ganz, Sheldon M. Ganz, CPA, P.C., Eva Tehrani, HSBC Bank USA, National Association, HSBC Securities (USA) Inc., Defendants. |
| Court | U.S. District Court — Eastern District of New York |
OPINION TEXT STARTS HERE
Otterbourg, Steindler, Houston and Rosen, P.C., by: Richard Gerard Haddad, Esq., Of Counsel, New York, NY, for the Plaintiff.
Judd Burstein PC, by: Judd Burstein, Esq., Of Counsel, New York, NY, for the Defendant Jonathan Winston.
Matalon Shweky Elman PLLC, by: Howard I. Elman, Esq., Of Counsel, New York, NY, for the Defendants Sheldon M. Ganz & Sheldon M. Ganz, CPA, PC.
Law Offices of Eric Franz PLLC, by: Eric P. Franz, Esq., Andrew Leopoldo Mancilla, Esq., Of Counsel, New York, NY, for the Defendant Eva Tehrani.
Law Offices of Steven D. Isser, by: Steven David Isser, Esq., Of Counsel, New York, NY, for the Defendant Eva Tehrani.
Sills Cummis & Gross P.C., by: Jonathan Young, Esq., Andrew W. Schwartz, Esq., Of Counsel, New York, NY, for the Defendants HSBC Bank USA, National Association & HSBC Securities (USA) Inc.
No Appearance for 513 Central Park LLC (Relief Defendant).
On July 18, 2012, the Plaintiff Annette Lorber (“the Plaintiff”) commenced this action by filing a Complaint against multiple defendants, which was thereafter reduced to the following: Jonathan Winston (“Winston”); Sheldon M. Ganz (“Ganz”); Sheldon M. Ganz, CPA, P.C.; Eva Tehrani (“Tehrani”); HSBC Bank USA, National Association (“HSBC Bank”); and HSBC Securities (USA) Inc. (“HSBC Securities,” and collectively, “the Defendants”). The Plaintiff seeks compensatory and punitive damages under the federal Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961 et seq. (“RICO”), as well as for common law fraud under New York law; fraudulent inducement under New York law; conversion under New York law; aiding and abetting conversion under New York law; negligence under New York law; unauthorized signatures under the New York Uniform Commercial Code Article III; breach of contract under New York law; and commercial bad faith under New York law.
Specifically, the Plaintiff alleges that the Defendants Winston and Ganz, in furtherance of a fraudulent real estate scheme, defrauded the Plaintiff through an enterprise known as Winhaven, which included Winhaven Realty LLC; Winhaven Development Corp.; Winhaven Development of New York Inc.; Winhaven Group LLC; Winhaven Holdings LLC; Winhaven Management Corp.; Winhaven Management of New York Inc.; Winhaven of New York City LLC; Winhaven Associates LLC; Winhaven Associates II LLC; Winhaven Capital Partners; Winhaven 640 Broadway LLC; 640 Broadway Owners LLC; Winhaven Mattituck LLC; Winhaven Boerum LLC; and Winhaven Westhampton Beach Plaza LLC (collectively, “Winhaven”).
The Plaintiff subsequently filed an Amended Complaint on September 14, 2012. The Amended Complaint asserted new claims for breach of fiduciary duty and aiding and abetting breach of fiduciary duty under New York law. The Amended Complaint also withdrew the Plaintiff's previous claim for aiding and abetting conversion under New York law. On November 29, 2012, with permission from the Court, the Plaintiff re-filed the Amended Complaint with corrected exhibits.
Presently before the Court are five motions. In this regard, each of the remaining Defendants moves to dismiss the Plaintiff's Amended Complaint pursuant to Federal Rules of Civil Procedure (“Fed. R. Civ. P.”) 9(b), 12(b)(6) and the statute of limitations, among other grounds. For the reasons set forth below, the Court dismisses the Plaintiff's Amended Complaint.
Unless otherwise stated, the following facts are drawn from the Plaintiff's Amended Complaint and construed in a light most favorable to the Plaintiff.
On June 24, 1946, the Plaintiff was born in Leipzing, East Germany. The Plaintiff's parents believed that their daughter should marry and bear children, but not take part in business. Therefore, the Plaintiff's education was, for the most part, limited to art and culinary skills.
In 1971, the Plaintiff traveled to Italy with her parents. While there, she met Edward Strausman (“Strausman”), who was from Great Neck, New York. Strausman owned and operated Strausman Construction, a successful real estate construction and development company. In 1973, the Plaintiff relocated with Strausman to New York, and in 1974, the Plaintiff married Strausman. Thereafter, they had three daughters. In 1984, the Plaintiff became a United States citizen.
While married to Strausman, the Plaintiff was not employed and she did not take part in managing the family finances. Rather, she devoted her time to raising her children and participating in activities with her temple in Great Neck. In September 1984, the Plaintiff and Strausman divorced. As a result of the divorce, the Plaintiff received a generous financial settlement.
About eight years later, in April 1992, the Plaintiff married Martin Lorber (“Lorber”) who was also from Great Neck, New York. Lorber was a successful and influential business man. He owned and operated WorldWide Footwear, Inc. (“WorldWide”), which manufactured and distributed beach footwear and slippers to North American retailers, such as J.C. Penney, Target and Bed Bath & Beyond. In 1999, the Plaintiff and Lorber established their residence at 59 Cornwells Beach Road in Sands Point, New York (“the 59 Cornwells Beach Road home” or “the 59 Cornwells Beach Road property”).
During the Plaintiff's marriage to Lorber, he determined how he and the Plaintiff would invest their assets, including their marital assets and those assets that the Plaintiff inherited from her father and received from her previous marriage to Strausman. In 1999, Lorber opened several securities accounts for the Plaintiff with the Defendant HSBC Securities. These accounts included two securities accounts that contained primarily bond investments (“the Securities Accounts”). Lorber worked with Kevin Neville (“Neville”), a registered representative with HSBC Securities, to determine the investment strategies for the Securities Accounts. Neville met with the Plaintiff and Lorber several times each year to discuss the status of the Securities Accounts. As such, he was personally aware of who the Plaintiff and Lorber were and what their needs and wishes were regarding the Securities Accounts. Until Lorber's death in August 2003, Lorber was the sole person with trading authority in the Securities Accounts.
Also in 1999, Lorber decided that WorldWide needed access to a revolving credit facility so it could meet some of the challenges of an increasingly global marketplace. Thus, in September 1999, Lorber and the Plaintiff entered into an agreement with the Defendant HSBC Bank under which HSBC Bank extended a line of credit to Lorber and the Plaintiff as co-borrowers (“the Credit Line”). The amount of the Credit Line was $6,500,000.
The Credit Line was secured by a note in which Lorber and the Plaintiff promised to repay, on demand or at the expiration of one year, the amount of any advances under the Credit Line (“the Note”). Both the Credit Line and the Note were secured by one of the Plaintiff's Securities Accounts, which at the time contained primarily bonds worth approximately $8,000,000 (“the Collateral Account”). Neville was the broker at HSBC Securities who managed the Collateral Account.
When Lorber and the Plaintiff secured the Credit Line, Ray Finken (“Finken”) was the relationship manager at HSBC Bank. Finken was responsible for the Credit Line and all related account activity. Until 2009, Finken oversaw the Credit Line; at that time, he departed from HSBC Bank.
In this regard, Finken first met with the Plaintiff and Lorber in 1999 when they entered into the Credit Line Agreement with HSBC Bank. Over the next four years, Finken met with Lorber several times to discuss and renew the Credit Line. Finken was also responsible for sending all account statements for the Credit Line to Lorber's attention at his WorldWide office in Merrick. In this way, Finken was personally aware of who the Plaintiff and Lorber were; the purpose for which they took out the Credit Line; the manner in which payments toward the Credit Line were made; and the manner in which annual renewals of the Credit Line were effectuated.
When Lorber died in August 2003, Finken attended Lorber's funeral. This was the last time the Plaintiff ever saw Finken. At no time after Lorber's death did Finken ever meet with the Plaintiff to discuss the future use or purpose of the Credit Line, despite the fact that the Plaintiff was then the sole borrower on the Credit Line and her Collateral Account secured the Credit Line. After Finken departed HSBC Bank, Christine Givelechian (“Givelechian”) became the relationship manager for the Credit Line.
Lorber periodically utilized the Credit Line in connection with WorldWide. He always timely repaid Credit Line advances and the Credit Line was never drawn to its maximum while Lorber used it. In addition, although she was a co-borrower on the Credit Line, the Plaintiff never advanced or used funds from the Credit Line.
In or about January 1999, the Defendant Winston began dating the Plaintiff's youngest daughter, Eve (“Eve”). At the time, Eve was 22 years old, while Winston was approximately 32 years old. Eve never completed college and she apparently had no knowledge of business, finance, banking or real estate. More than a year after they started dating, in April 2000, Eve and Winston married. Five months later, Eve gave birth to their first of three daughters.
According to the Plaintiff,...
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